Impact of Zakat Taxon Economic Recession Compared to Regular (State) Taxes

Abstract

The Islamic obligation of Zakat plays a significant role in financing development, for Zakat has an investment role because it is oriented to generate and create new human productive capacities in society, in addition to its financing role through the means of expenditure. Furthermore, Zakat addresses and handles the psychological and objective reasons driving individuals to horde (amassment)and to refrain from participating in economic activity. Undoubtedly tax laws are not devoid of benefits to the state in case formulated according to well studied bases, where such taxes are imposed on segments of society which would not be harmed nor suffer distress as a consequence of such taxes, or which in principle should not be subjected to such taxes, given that they should basically be levied only on the wealthy, and should be imposed only in case the state is in need. And in all cases the present study focuses on highlighting the difference between Zakat as a religious obligation, and taxes as a legal obligation, and the impact of each of them on recession as an economic concept.

Keywords: Zakat, Taxes, Recession.

DOI: 10.7176/EJBM/11-9-04

Publication date:March 31^st 2019